How Social Production Can Revive and Reinvent the Economy
By Michel Bauwens and David Bollier
We are calling the problem facing the global economy a recession, but it is more accurately described as a snarl of de-leveraging and deflation, which may take ten years or more to resolve. But in the meantime, we face an urgent question: What do we do with the millions of people, especially the thousands of university graduates who might go years without finding suitable jobs? A long period of economic recovery will not only waste the talents of millions of people, it will deprive them of the ability to learn and augment their expertise. If governments dither and the corporate elite cling to their privileges, a long period of recovery could easily lead to great social unrest among disaffected youth and the unemployed.
As we wait for a restructuring of financial markets and deleveraging of assets, is there another way? Are there policies that could achieve higher value for public investments than shoveling more of them into markets that will take years to re-organize?
The positive and hopeful answer is Yes, there is. It all has to do with spurring the potential of what we can call “social innovation,” or “social production.” This is the realm of Internet-mediated production that leverages the capacities of open social networks and
achieve better positive externalities”
To understand the logic of this promise, we can look to a less severe, but nevertheless serious economic crisis -- the Internet “dot-com” collapse in 2000-1. The pundits had been predicting, then as now, that without capital, innovation would stop. In actual fact, the very opposite occurred. Almost everything we now take for granted – the Web 2.0, the emergence of social and participatory media – was born in the crucible of that downturn. Innovation did not slow down; it actually increased during the investment drought.
This phenomenon revealed a new tendency at work: capitalism is increasingly being divorced from entrepreneurship. Entrepreneurship is becoming a networked activity taking place through open platforms of collaboration, which may or may not require serious infusions of capital.
In essence, Internet technology is fundamentally changing the relationship between innovation and capital. Before the Internet, in the world of “creative destruction” decreed by economist Joseph Schumpeter, innovators needed capital for their research, and that research would then need to be protected through copyright and patents. Further funds would be needed to build the necessary factories.
In the post-Schumpeterian world, however, creative souls from around the globe can congregate through the internet. They can create new types of collaboration platforms on the cheap, and then build new software, information repositories, music- and video-sharing websites, social networking sites, and much else.
Paradoxically, these entrepreneurs only need capital when they are successful, and the servers risk crashing from overload. Think about Bittorrent, the most important software for exchanging multimedia content over the internet. It was created by a single programmer, self-financed through his personal credit cards, with zero external funding.
Although the Internet has empowered many individuals to launch game-changing innovations – Linus Torvalds (Linux), Shawn Fanning (Napster), Richard Stallman (free software) – the real story of the Internet is its ability to enable large communities to cooperate. The collaborations are not limited to knowledge and software, but extend to everything that knowledge and software enables, including manufacturing. Anything that needs to be physically produced, needs to be ‘virtually designed’ in the first place.
Networked collaboration – often called “social innovation” or “social production” – is increasingly responsible for most innovation. In an era where most educated people have their brains interconnected through multiple networks of their choice, the idea that all valuable activity occurs through “the marketplace,” and that one is either an active producer or a passive “consumer” is a dangerous anachronism. Nowadays, no single company relying on its own proprietary systems can compete with open business ecologies practicing co-design and co-creation with other companies and even consumers (a practice often called “crowd-sourcing”).
Companies who wish to harvest the fruits of open platforms that serve an open business ecosystem are adopting new attitudes toward intellectual property. They realize that is they privatize the work of the collectivity, no one will be willing to collaborate for their exclusive, private gain! Therefore, those companies that enable and empower social innovation, that use open forms of intellectual property, are more successful in attracting cooperation. They can build their business on the social exchange that occurs in a thriving knowledge commons – even as everyone else also benefits from participating in the commons.
Traditionalists may scoff, but the system is fantastically productive and innovative. The Linux economy is now estimated to be a $36 billion economy, and that is just one of countless free software-based sectors. Chris Anderson of Wired magazine estimates the annual total value produced through social innovation at $300 billion.
One of the most robust sub-sectors of this economy is user-generated content. The new successful companies like Google, YouTube, Flickr, Twitter and all the rest, are not creating value themselves, but rather enabling user communities to create value through their well-designed platforms. As a rule, all successful social production ecosystems end up spawning vibrant business ecosystems that both profit from the knowledge commons while sustaining it. IBM now reaps from than half its revenues from Linux-related service and support – more than its patent portfolio! – yet its participation in the Linux community has fortified the social communities and open knowledge exchange within Linux circles. In Latin American countries like Ecuador and in some states in India such as Kerala, it is said that nearly every free software programmers has a job.
But what does this all mean for our current economic crisis? It means that the strong distinction between working productively for a wage, and idly waiting for one, is melting. All the technical and intellectual tools are available to allow people to continue producing valuable things. They can keep building their work experience (“knowledge capital”), their social life (“relationship capital”) and reputation. All three of which will be crucial in keeping them not just employable, but will actually substantially increase their potential and capabilities.
And business can benefit, too: By helping sustain the social commons that generates innovation, it can build new types of value-added products “on top of” the commons. It can ascertain emerging consumer and business demands by actively participating in the new open business ecosystems, rather than hiding within their closed, proprietary shells.
Government can and should do a great deal to facilitate social production. It would give people opportunities to continue developing their skills and knowledge; help businesses develop innovative, competitive products and services; and help rebuild the economy on a more solid footing,
There are several things that public authorities must do to achieve this vision, however. First, a fully functional broadband infrastructure should be made a high priority. In particular, it should reach rural and inner-city residents so that their talents can be tapped and so that scalable cooperation can be achieved.
Public authorities also have an important role to play in educating business and the public about the role of the commons in innovation and business development. Government should create a Commons Institute to serve as a clearinghouse of best practices in key areas of social life and business. It should teach users about open licenses for content and explain their benefits. In Brest, France, city authorities have been instrumental in supporting and sustaining the cultural production of their citizens, which has not only enriched the local cultural life, but attracted more tourists. [rewrite or elaborate…unclear what Brest did] Government should also create public “co-working spaces” that are linked to processes of business incubation. [needs more concrete detail or example]
Third, public authorities should themselves start to incubate innovation. In Toronto, for example, the Open Source Business Resource has been instrumental in supporting free software start-ups. It has helped forge a local business ecology that
and open source service industry that support local businesses in their adaptive processes.
Fourth, public authorities should offer various forms of public patronage – awards, grants, procurement contracts – to those individuals who are developing innovation commons. The most robust innovations are usually propelled by passionate individuals working in collaborative relationships with others in a knowledge commons. It therefore makes good sense, both in business and in policy terms, to create new forms of support for the work of individual pioneers. Just as 18th Century science was supported by a network of patrons, leading to the expansion of scientific research, so government should use its procurement and bully pulpit to promote the processes of open knowledge, software and design.
Finally, social innovation should not be seen in isolation, but as part of a growing and interconnected set of trends towards “peer to peer” infrastructures. Next to the well-known Internet-based infrastructure of digital communications, there are other important networked infrastructures whose fortification will help local economies survive periods of globalized crisis.
For example, Obama’s “green stimulus” proposal shows an understanding of the value of peer-to-peer energy grids for the energy infrastructure, and as a strategy to deal with Peak Oil and climate change. Moving beyond a dependency on depletable fossil fuels, a p2p energy grid allows citizens to invest in home and neighborhood-based energy production based on renewable energy, and share or sell that energy with others on the grid. A p2p energy grid in this way strengthens local communities and opens the door to a thriving new sort of energy sector.
Peer-to-peer principles can be used to improve our monetary system as well by enabling so-called “complementary monetary systems.” The proliferation of regional currencies in the Germanic-language countries of Europe, and the success of the WIR system in Switzerland and Thailand’s Santi Suk complementary currency, show how a community can retain a greater part of the local value that it produces, rather than letting it be “exported” to other parts of the nation or world. P2P monetary systems help insulate local economies from the volatility of national currencies that are intertwined with the global economy, providing localities with much-needed resilience.
As these many examples suggest, a “social innovation” stimulus plan could provide incalculable benefits to Americans, and other nations, in this time of crisis. Despite capital scarcity, social innovation can let the process of value creation to continue. It can deepen and enhance human capital while building a resilient ecology of businesses that cooperate with social innovation communities.
Through active public support of this new “fourth sector,” [Michel—what is the third after markets and gov’t?] we can build much stronger and resilient economies that can withstand the storms of globalization. Instead of locking up most know-how and creativity through intellectual property rights (whose circulation is now limited by bankruptcies and the depressed economy), social production and open licensing can unleash creativity and know-how to the knowledge commons. If we dare to cultivate this precious commons, we can expect markets to revive – and better! – reinvent themselves on a stronger, more resilient foundation.
1840 words
We are calling the problem facing the global economy a recession, but it is more accurately described as a snarl of de-leveraging and deflation, which may take ten years or more to resolve. But in the meantime, we face an urgent question: What do we do with the millions of people, especially the thousands of university graduates who might go years without finding suitable jobs? A long period of economic recovery will not only waste the talents of millions of people, it will deprive them of the ability to learn and augment their expertise. If governments dither and the corporate elite cling to their privileges, a long period of recovery could easily lead to great social unrest among disaffected youth and the unemployed.
As we wait for a restructuring of financial markets and deleveraging of assets, is there another way? Are there policies that could achieve higher value for public investments than shoveling more of them into markets that will take years to re-organize?
The positive and hopeful answer is Yes, there is. It all has to do with spurring the potential of what we can call “social innovation,” or “social production.” This is the realm of Internet-mediated production that leverages the capacities of open social networks and
achieve better positive externalities”
To understand the logic of this promise, we can look to a less severe, but nevertheless serious economic crisis -- the Internet “dot-com” collapse in 2000-1. The pundits had been predicting, then as now, that without capital, innovation would stop. In actual fact, the very opposite occurred. Almost everything we now take for granted – the Web 2.0, the emergence of social and participatory media – was born in the crucible of that downturn. Innovation did not slow down; it actually increased during the investment drought.
This phenomenon revealed a new tendency at work: capitalism is increasingly being divorced from entrepreneurship. Entrepreneurship is becoming a networked activity taking place through open platforms of collaboration, which may or may not require serious infusions of capital.
In essence, Internet technology is fundamentally changing the relationship between innovation and capital. Before the Internet, in the world of “creative destruction” decreed by economist Joseph Schumpeter, innovators needed capital for their research, and that research would then need to be protected through copyright and patents. Further funds would be needed to build the necessary factories.
In the post-Schumpeterian world, however, creative souls from around the globe can congregate through the internet. They can create new types of collaboration platforms on the cheap, and then build new software, information repositories, music- and video-sharing websites, social networking sites, and much else.
Paradoxically, these entrepreneurs only need capital when they are successful, and the servers risk crashing from overload. Think about Bittorrent, the most important software for exchanging multimedia content over the internet. It was created by a single programmer, self-financed through his personal credit cards, with zero external funding.
Although the Internet has empowered many individuals to launch game-changing innovations – Linus Torvalds (Linux), Shawn Fanning (Napster), Richard Stallman (free software) – the real story of the Internet is its ability to enable large communities to cooperate. The collaborations are not limited to knowledge and software, but extend to everything that knowledge and software enables, including manufacturing. Anything that needs to be physically produced, needs to be ‘virtually designed’ in the first place.
Networked collaboration – often called “social innovation” or “social production” – is increasingly responsible for most innovation. In an era where most educated people have their brains interconnected through multiple networks of their choice, the idea that all valuable activity occurs through “the marketplace,” and that one is either an active producer or a passive “consumer” is a dangerous anachronism. Nowadays, no single company relying on its own proprietary systems can compete with open business ecologies practicing co-design and co-creation with other companies and even consumers (a practice often called “crowd-sourcing”).
Companies who wish to harvest the fruits of open platforms that serve an open business ecosystem are adopting new attitudes toward intellectual property. They realize that is they privatize the work of the collectivity, no one will be willing to collaborate for their exclusive, private gain! Therefore, those companies that enable and empower social innovation, that use open forms of intellectual property, are more successful in attracting cooperation. They can build their business on the social exchange that occurs in a thriving knowledge commons – even as everyone else also benefits from participating in the commons.
Traditionalists may scoff, but the system is fantastically productive and innovative. The Linux economy is now estimated to be a $36 billion economy, and that is just one of countless free software-based sectors. Chris Anderson of Wired magazine estimates the annual total value produced through social innovation at $300 billion.
One of the most robust sub-sectors of this economy is user-generated content. The new successful companies like Google, YouTube, Flickr, Twitter and all the rest, are not creating value themselves, but rather enabling user communities to create value through their well-designed platforms. As a rule, all successful social production ecosystems end up spawning vibrant business ecosystems that both profit from the knowledge commons while sustaining it. IBM now reaps from than half its revenues from Linux-related service and support – more than its patent portfolio! – yet its participation in the Linux community has fortified the social communities and open knowledge exchange within Linux circles. In Latin American countries like Ecuador and in some states in India such as Kerala, it is said that nearly every free software programmers has a job.
But what does this all mean for our current economic crisis? It means that the strong distinction between working productively for a wage, and idly waiting for one, is melting. All the technical and intellectual tools are available to allow people to continue producing valuable things. They can keep building their work experience (“knowledge capital”), their social life (“relationship capital”) and reputation. All three of which will be crucial in keeping them not just employable, but will actually substantially increase their potential and capabilities.
And business can benefit, too: By helping sustain the social commons that generates innovation, it can build new types of value-added products “on top of” the commons. It can ascertain emerging consumer and business demands by actively participating in the new open business ecosystems, rather than hiding within their closed, proprietary shells.
Government can and should do a great deal to facilitate social production. It would give people opportunities to continue developing their skills and knowledge; help businesses develop innovative, competitive products and services; and help rebuild the economy on a more solid footing,
There are several things that public authorities must do to achieve this vision, however. First, a fully functional broadband infrastructure should be made a high priority. In particular, it should reach rural and inner-city residents so that their talents can be tapped and so that scalable cooperation can be achieved.
Public authorities also have an important role to play in educating business and the public about the role of the commons in innovation and business development. Government should create a Commons Institute to serve as a clearinghouse of best practices in key areas of social life and business. It should teach users about open licenses for content and explain their benefits. In Brest, France, city authorities have been instrumental in supporting and sustaining the cultural production of their citizens, which has not only enriched the local cultural life, but attracted more tourists. [rewrite or elaborate…unclear what Brest did] Government should also create public “co-working spaces” that are linked to processes of business incubation. [needs more concrete detail or example]
Third, public authorities should themselves start to incubate innovation. In Toronto, for example, the Open Source Business Resource has been instrumental in supporting free software start-ups. It has helped forge a local business ecology that
and open source service industry that support local businesses in their adaptive processes.
Fourth, public authorities should offer various forms of public patronage – awards, grants, procurement contracts – to those individuals who are developing innovation commons. The most robust innovations are usually propelled by passionate individuals working in collaborative relationships with others in a knowledge commons. It therefore makes good sense, both in business and in policy terms, to create new forms of support for the work of individual pioneers. Just as 18th Century science was supported by a network of patrons, leading to the expansion of scientific research, so government should use its procurement and bully pulpit to promote the processes of open knowledge, software and design.
Finally, social innovation should not be seen in isolation, but as part of a growing and interconnected set of trends towards “peer to peer” infrastructures. Next to the well-known Internet-based infrastructure of digital communications, there are other important networked infrastructures whose fortification will help local economies survive periods of globalized crisis.
For example, Obama’s “green stimulus” proposal shows an understanding of the value of peer-to-peer energy grids for the energy infrastructure, and as a strategy to deal with Peak Oil and climate change. Moving beyond a dependency on depletable fossil fuels, a p2p energy grid allows citizens to invest in home and neighborhood-based energy production based on renewable energy, and share or sell that energy with others on the grid. A p2p energy grid in this way strengthens local communities and opens the door to a thriving new sort of energy sector.
Peer-to-peer principles can be used to improve our monetary system as well by enabling so-called “complementary monetary systems.” The proliferation of regional currencies in the Germanic-language countries of Europe, and the success of the WIR system in Switzerland and Thailand’s Santi Suk complementary currency, show how a community can retain a greater part of the local value that it produces, rather than letting it be “exported” to other parts of the nation or world. P2P monetary systems help insulate local economies from the volatility of national currencies that are intertwined with the global economy, providing localities with much-needed resilience.
As these many examples suggest, a “social innovation” stimulus plan could provide incalculable benefits to Americans, and other nations, in this time of crisis. Despite capital scarcity, social innovation can let the process of value creation to continue. It can deepen and enhance human capital while building a resilient ecology of businesses that cooperate with social innovation communities.
Through active public support of this new “fourth sector,” [Michel—what is the third after markets and gov’t?] we can build much stronger and resilient economies that can withstand the storms of globalization. Instead of locking up most know-how and creativity through intellectual property rights (whose circulation is now limited by bankruptcies and the depressed economy), social production and open licensing can unleash creativity and know-how to the knowledge commons. If we dare to cultivate this precious commons, we can expect markets to revive – and better! – reinvent themselves on a stronger, more resilient foundation.
1840 words
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